Coronavirus infects a real estate deal
We won’t really know how bad the damage to the economy from the pandemic has been until it starts up again in full.
I believe that is especially true with the real estate market, which must be taking a beating.
I know one Realtor who recently sold an expensive house, after a few social distance showings. But generally, buying and selling real estate seems like something that will remain low on most people’s agendas for a long time.
And ultimately, it would seem, a declining number of buyers will lead to lower prices. Long-lasting damage to the economy is going to hit real estate hard, even with historically low interest rates.
I spoke this week to Jill Tourgee of Montville, a single mother of two who told me how coronavirus has thrown a bucket of water on her pending deal to buy a house.
I think of her as an early real estate victim of the pandemic.
Long before coronavirus had reared its ugly head here, Tourgee had negotiated a deal to buy a single-family house in Montville and was in the last stages of mortgage financing approval.
Then her employer, Mohegan Sun, where she’s been in the accounting department for nearly 24 years, bowed to Gov. Ned Lamont’s shutdown orders, closed the doors and furloughed its workforce.
Tourgee is collecting unemployment and, with the stimulus boost, expects to be making as much as she was on the casino payroll. She doesn’t own any other real estate and says she has enough money in the bank to make years of mortgage payments.
But the mortgage company Tourgee has been working with was blunt: With no recent pay stub there will be no loan.
She and her Realtor checked with other banks and mortgage brokers and got the same answer from all of them. No one would issue a new mortgage to a furloughed worker.
“I’m a single mom who needs to move,” Tourgee wrote in an email about the standoff over the mortgage.
While she seemed understandably frustrated about the situation when I spoke with her, she also understands why the mortgage company must enforce its rules.
On the other hand, she wishes the governor could do something that would help ease those underwriting rules. After all, she said, there must be others in her predicament.
What especially worries her is that there aren’t many houses in Montville in her price range and nothing new coming on the market. She doesn’t think she will be able to find the same deal again.
So far, the sellers have agreed to extensions of the contract. But another new extension deadline is approaching and she does not know if the sellers will give her more time to get back to work and qualify for the mortgage or put the property back on the market and look for a new buyer.
Maybe I’m wrong about the immediate future of the real estate market.
It could be that, when the economic spigot opens again, pent-up demand will make the market roar. People who have been cooped up and looking at the same four walls all this time might decide it’s time for a change.
Of course that wouldn’t be good for people like Tourgee, already caught in the down drafts of the pandemic and unable to consummate a good deal.
This is the opinion of David Collins.
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